As a parent or caregiver to a person with a severe disability, it is critical to guarantee that the assistance your loved one needs for their care and financial future will be secured and will continue even if you are no longer able to supply it.

What Is a Special Disability Trust?

A Special Disability Trust (“SDT”) is a type of legal entity. This has significant advantages for the present as well as the long-term care of sick family members with disabilities. 

An SDT is a trust that you set up as part of your estate plan to make certain that a loved one with a severe impairment is cared for and remains eligible for social security payments and concessions. 

Setting up an SDT also enables us to make decisions for immediate family members and caregivers with transferable financial provisions and gift contributions straight into the trust for the benefit of the beneficiary’s continued care and housing both now and in the future.

Who Can Establish a SDT?

Anyone may set up an SDT as long as they follow the rules. In order to be eligible, you must meet the following requirements: The Department of Human Resources evaluated and approved Services:

• The SDT’s primary goal must be solely for the care and maintenance of the beneficiary’s lodging requirements.
• There can only be one main beneficiary.
• The recipient must fulfill the requirements of a “serious handicap.”
• Appoint an independent trustee.
• Follow investing standards.
• Comply with yearly financial reporting requirements and tax obligations.

Why Use Disability-Specific Planning?

Whether or not special accommodations are necessary will be determined. 

Depending on your unique situation, the talents of your loved one, and the resources at their disposal, no two people’s situations are the same. Nonetheless, a frequent factor to consider while constructing an SDT is that it ensures your loved one’s safety in the long run. 

They establish measures to ensure the safety of their financial situation for a long time. This safeguard is extremely important. This is crucial in situations where your loved one may require a lot of help from others to manage their money and possessions.

What Are the Advantages of an SDT?

There are several advantages to using an SDT, which include the following:

Social Security Benefits

• The beneficiary’s primary residence is located and is not subject to the Centrelink assets test.
• Income is excluded from the means test for calculating the beneficiary’s income support payment.
• The recipient is permitted to work up to 7 hours per day at or above the applicable minimum wage or have the ability to work with no time constraints via the supported wage structure.
• A gift concession of up to $500,000 is available to qualifying family members who are also members of the social security benefit program.
• An asset test exemption of up to $636,750 is available to the recipient (as at 1 July 2015). Medical, Care, and Lodging Benefits
• Expenses for medical and dental care include medical insurance, ambulance coverage, and medicine; surgery; specialty; and general practitioner services are available.
• Payment for appropriate lodging requirements, involving upkeep and modification of the principal home of the recipient is subject to payment for the acquisition of real estate, the payment of rent, or the provision of lodging. Recreation, Health, and Well-Being Benefits.
• The recipient may get up to $11,250 each year to spend on leisure and social events throughout the year. It provides better adaptability and more complete care for your loved one.
  

  Concessions on Taxes

  The following are free from Capital Gains Tax:

  • Any asset contributed to the SDT
  • The gift of the beneficiary’s primary dwelling within the SDT
  • For the main beneficiary’s receiver, if the house is sold within two years of the death of a beneficiary, Unspent income is taxed at the beneficiary’s marginal rate. Instead of the highest marginal tax rate, use the income tax rate. 

  Checks for Compliance and Reviews

  SDTs are reviewed on a yearly basis, and the necessary changes are made.

  Documents must be submitted to the Department of Human Services for evaluation.

  The following documents are necessary for yearly reviews:

  • Financial Reports
  • Income Tax Return
  • A statutory declaration that confirms that the SDT’s expenditure was solely on care, accommodation and discretionary costs related to and for the advantage of the beneficiary. 

  Prior to creating an SDT, it is also critical that your intended beneficiary be assessed under the Social Security Act 1991 (Cth).

  Care must be taken to ensure that the primary goal of a SDT, which is to care for a loved one with a severe disability, is met. Non-compliance may result in an inability to implement the social security and taxation concessions of the SDT.

  How Long Does an SDT Last?

  Once you have acquired an SDT, one may be established with permission from Centrelink or via your will.

  In any case, the SDT will cease on the following condition:

  • The beneficiary’s death
  • When all of the trust’s assets have been spent on the beneficiary.
  • As soon as possible, as required by law. 

  If the beneficiary dies before all of the assets have been distributed and expended, the SDT will be terminated, and the SDT’s assets will be forfeited and vested in the SDT’s residual beneficiaries.

  Is This the Best Option for Me?

  If you are caring for a loved one who has a particular need and would want to have some peace of mind about their future.

  Please contact us immediately for a free consultation on your financial well-being.

  We have the knowledge and experience to demonstrate to you how an SDT may be used to bring security, happiness, comfort, and stability to your loved one’s future.

  Our estate planning services are all-inclusively customised to your specific requirements to guarantee that you ensure the safety of your possessions and interests, as well as the security of your family’s future.